October 27, 2014

During his debate with Alison Lundergan Grimes, Mitch McConnell stumbled around with his answer to what he would do with the Affordable Care Act. While he promised to repeal it, his word salad about what to do about the popular Kynect website that has connected Kentuckians with access to health care was unintelligible.

The Huffington Post subsequently tried to get some clarification from the campaign, but a cone of silence has been dropped and no one is talking, except for Senate staffers in McConnell's office:

The office added, however, that McConnell doesn't want to simply leave it at full repeal. He wants to replace the Obamacare model, a "broken system," as the aide put it, with "common-sense reforms that would lower costs for Americans." It remains to be determined what that replacement would be.

As it turns out, they actually do have a detailed plan, but no one is talking about it. It's like a surprise -- trust Uncle Mitch to repeal and replace and it shall become reality! Why aren't they shouting it from the mountaintops?

The Project 2017

Let me introduce you to The Project 2017, headed up by Bill Kristol and Dan Senor, among others, and presumably funded by the usual billionaire suspects. The Project 2017 has a comprehensive plan outlined on their website for how they propose to replace the ACA.

First, we start with full repeal of the Affordable Care Act. That means pre-existing conditions are once again in play, no premium assistance, no co-pay assistance, no state exchanges, no minimum benefits, and annual and lifetime caps on what insurers must pay are reinstated. Also, premiums would not be limited for different age bands, so that 60-year olds could pay as much as 10 or 15 times what a 20-year old might pay.

Now that it's 2008 all over again, here are the bullets The Project 2017 would like us to swallow as "common sense reforms":

I. End of Year Refundable Tax Credits

"We propose providing a refundable health insurance tax credit of $1,200 for those under 35 years of age, $2,100 for those between 35 and 50 years of age, and $3,000 for those over 50, in addition to $900 per child. These tax credits would be made available to those, and only to those, who purchase health insurance through the individual market."

They also propose to index those credits for cost-of-living increases, while simultaneously acknowledging that the 3 percent increase will not cover the rising costs of health care.

In what may be the most cynical play of all, they claim that people would be able to buy health insurance for as little as $15 per month, yet they fail to acknowledge that the insurance they're buying would be high-deductible substandard coverage with annual and lifetime limits on what could be paid out. $15 per month might buy a policy, for example, that would cover up to $75,000 for a lifetime limit. Prescription coverage would be out of the question. If you're a cancer survivor or diabetes patient, forget about coverage that would help you manage your disease.

They also claim that people in various age groups would actually pay less than they do now, but fail to mention those over age 55 who are not yet eligible for Medicare. The group between age 55-65 pays the most in premium costs under this plan, but are omitted from the top-level summary.

II. Return to COBRA and High Risk Pools

If you lose your job, you'll get to keep your employer-paid insurance for a couple of months while you head out to the individual insurance market to find out what they've got for you. It's a form of COBRA-lite.

However, those with pre-existing conditions will still have pre-existing conditions when it comes to finding health insurance coverage. But there is this:

[W]e propose allocating $7.5 billion a year (with a 3 percent annual increase following year-1) in federal funding for state-run “high risk” pools, an insurance framework championed by Capretta, Miller, and others. Those with expensive preexisting conditions would be able to purchase policies through state-run, federally subsidized high-risk pools. Through such high-risk pools, a person could purchase a partially subsidized health insurance policy, and his or her share of the premiums could not exceed some set percentage (say, 150, 200, or 250 percent)—with the exact percentage to be set by each separate state—of the average cost of a policy for a person without preexisting conditions in that same demographic group (based on age, sex, and geography). No one could be denied coverage through such high-risk pooling, no matter how unhealthy he or she might be.

Crucially, this federal funding would be provided to each state as a defined contribution. Each state would get a set amount each year (to spend only on its intended purpose) based upon its population of American citizens. While most states would likely supplement this federal funding with funding of their own, states’ outlays would not trigger any matching federal funds. As Medicaid and other examples have sufficiently demonstrated, the practice of matching states’ contributions with federal money merely encourages states to be generous in spending money (as every dollar spent nets them more in federal revenues) and reluctant to stop spending money (as every dollar cut nets them only some portion of that in savings).

First, anyone who followed the transition from 2010 to 2014 understands that the high-risk pool funding described here would be wholly inadequate. The ACA funded state-based high risk pools for the transition years, and many states ran out of money with people waiting on lists to join those pools.

Second, this would mean that anyone unfortunate enough to have a pre-existing condition would be expected to pay three times as much as those without one for access to health care. In other words, we're right back to having a country full of people who have no access to health care again because they're human and imperfect.

Third, it appears from the language in the summary that they propose to end ALL federal funding for Medicaid so that poor people would either be entirely uninsured or subject to participation in unaffordable high risk pools.

III. The usual package of 'reforms' that aren't

Selling across state lines, medical liability insurance limits, rewards for healthy lifestyles (which really means ratings for being overweight or a smoker, etc.), and of course Health Savings Accounts.

To further encourage the use of HSAs, and to help people cover the day-to-day costs of care, we additionally propose a one-time tax credit of $1,000 per person to anyone who opens an HSA for the first time in the individual market, as well as to anyone who has already opened an HSA in the individual market but has never claimed this credit. (The credit would continue to be offered in subsequent years, but no person could claim it more than once, and its value would not increase over time.) The credit would be deposited directly into an HSA, and the result would be that anyone in America who opens an HSA would effectively start with $1,000 in it (or $2,000 for a couple, or $4,000 for a family of four). At relatively minimal cost (since it’s a one-time credit, per person), this would incentivize the use of HSAs, which encourage people to take control of their own health-care dollars and allow them to spend those dollars tax-free. It would also help to rebut the inevitable criticism from the left that some people cannot afford to cover the out-of-pocket cost of any of their care. In these ways, such a one-time tax credit would complement the tax credit for purchasing health insurance on the open market.

This assumes, of course, that people just have an extra couple of thousand dollars in the bank to toss into a HSA, which they do not. If HSAs weren't covering the costs of health care back in 2008, they're certainly not going to do it now.

This, then, is the three-legged stool Republicans propose to replace the Affordable Care Act with. If it's such a terrific plan, why aren't they shouting about it? Why isn't Mitch McConnell hammering Alison Lundergan Grimes with it? Why aren't they running a zillion ads about it?

I think we all know the answer to that.

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